Cafe Coffee Day Holdings Ltd, the newly formed holding company that owns the eponymous coffee retail chain and other group businesses, is turning out out be a cash guzzler. The company is close to getting at least $50 million in private equity investment from the private equity arm of JPMorgan, The Economic Times has reported.
According to the report, the deal would value the entity at $600 million, and JP Morgan could pick up around 8 per cent stake. Coffee Day Holdings is the holding firm for Amalgamated Bean Coffee Trading Company Ltd(ABCTCL), the coffee-growing and exporting business, Cafe Coffee Day, Coffee Day Hotels and Resorts, retail broking firm Way2Wealth and Tanglin Development, the real estate arm which has set up software parks in Mysore and Mangalore. The company also has a venture capital arm called Global Technology Ventures.
The infusion in the holding firm can vary depending on the deal structure and is most likely to be through convertible bonds, the report added. The holding company has been in the market to raise around $200 million through debt and equity both. It was seeking a valuation of $800 million to $1 billion, but the ongoing slump in the markets has lead to change in the terms of deal, the report further said. Deutsche Bank is also planning to infuse a debt of $125 million in the company.
Cafe Coffee Day has been on an expansion drive. Currently it is operating around 600 outlets across 100 cities, which includes outlets in Vienna (Austria) and Karachi (Pakistan). The company plans to expand the chain to some 1000 cafes by March next year, which translates to more than one outlet per day. Each outlet requires roughly an investment of Rs 40 lakh.
Coffee Day Holdings is promoted by V G Siddhartha, who started out as a coffee exporter and currently has around 5,000 acres of coffee plantation.
Last year Cafe Coffee Day(CCD) had closed a $95 million funding from Deutsche Bank and Templeton Darby Investments, part of Franklin Templeton Investments, which together picked up around 10% stake. The company is backed by Sequoia Capital, who invested $20 million and has also recived funding from International Finance Corporation (IFC). Sequoia was planning to invest $25 million in this round of funding, but now it may not be participating anymore, the ET report said.